North Dakota Pushes For More Pipelines

BISMARCK, N.D. (AP) — Gov. Jack Dalrymple urged industry and government officials on Tuesday to build more pipelines to keep pace with the breakneck speed of North Dakota's oil production.

Increasing the number of pipelines will reduce truck traffic, curb natural gas flaring and create more markets for the state's oil and gas, Dalrymple told about 200 people gathered for a conference he organized in Bismarck about the future of pipelines in North Dakota.

The state has 17,500 miles of oil and gas pipelines, and is adding about 2,500 miles of pipelines annually — roughly the distance between New York and San Francisco, according to Justin Kringstad, director of the North Dakota Pipeline Authority.

North Dakota is the nation's No. 2 oil producer behind Texas. The state is producing about 1 million barrels a day, though about 70 percent of it is being moved by rail, as producers increasingly turn to trains to reach U.S. refineries where premium prices are fetched.

However, recent derailments and fires — including an explosion in Quebec last July that killed 47 people — have drawn criticism from lawmakers and Congress about using trains to move oil. The light, sweet crude from the Bakken shale formation in western North Dakota is more volatile than many other types of oil. It's been involved in most of the major accidents as the crude-by-rail industry rapidly expanded during the past several years.

Dalrymple said rail movement is important, but pipelines are essential.

"We know over the long haul that pipelines are the safest, most efficient way to go," the Republican governor said.

North Dakota's pipeline capacity has more than doubled since 2010, to about 783,000 barrels per day, Dalrymple said. Pipeline and refinery projects that are proposed for completion by late 2016 would double the current takeaway capacity, he said.

Houston-based Enterprise Products Partners LP unveiled one of the proposed projects at the conference on Tuesday: a 1,200-mile pipeline from Stanley, in northwest North Dakota, to Cushing, Okla., the major crude hub where most U.S. shipments are sent.

Brent Secrest, a company vice president, told The Associated Press that the pipeline also would take crude from Montana, Colorado and Wyoming. But he said the bulk of the pipeline's 700,000-barrel capacity would be reserved for North Dakota crude.

Secrest said the proposed project has garnered much interest from producers, though the company has not formally sought commitments yet.

Kringstad, the North Dakota Pipeline Authority official, said there are currently about $9.5 billion in pipeline projects in North Dakota, including $6 billion dedicated to capturing natural gas and moving it to market. North Dakota drillers currently burn off, or flare, about 30 percent of the gas because development of pipelines and processing facilities to capture it hasn't kept pace with oil drilling.

New regulations became effective this month that require oil companies to submit a gas capturing plan with their drilling permits in an attempt to cut down the amount of natural gas that is burned off and wasted as a byproduct of oil production.

A group representing hundreds of companies working in North Dakota's oil patch has told state regulators that it expects the industry to be capturing 85 percent of the gas by 2016, and 90 percent within six years as more pipelines and processing facilities are built.

"We will reduce flaring in North Dakota," Dalrymple told those gathered at Bismarck State College's National Energy Center of Excellence. "It's just that simple."